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HSBC Australia faces $24.6M penalty over scam protection failures
HSBC Australia admits "serious failures" in protecting customers from scams. It is fined A$35m ($24.6m) proposed penalty by ASIC and also told the court its investigation concluded the bank had no proper controls over internal transfer systems and took 144 days on average to investigate customer reports of scams. The settlement is still pending Federal Court approval.
Key Highlights
- HSBC Australia has acknowledged businesses in serious failings to protect customers from scams.
- The proposed A$35 million (US$24.6 million) penalty facing the bank
- It took 144 days for the bank to investigate customer scam reports.
- The proposed settlement is subject to Federal Court approval.
Australia's corporate regulator has found that HSBC's Australian unit has acknowledged critical defects in its efforts to protect customers against scams and proposed an A$35 million ($24.6 million) fine for it, the bank said.
The Australian Securities and Investments Commission (ASIC) said it would ask the Federal Court jointly with HSBC to approve the proposed penalty.
Various Failures in Scam Controls Identified by ASIC
ASIC said its investigation determined that HSBC had failed to maintain effective controls over its internal transfer systems between May 2023 and May 2024, leaving customers at higher risk for unauthorised transactions.
It also said HSBC had been aware as early as May 2021 that it faced an increased risk from impersonation scams in which fraudsters posed as HSBC staff. ASIC says the bank violated its financial services licence conditions when it allowed scams to go undetected.
The regulator also claimed that HSBC took an average of 144 days to investigate customer reports of scams, and lacked adequate systems to support customers who are locked out of their accounts since the incidents.
Settlement Is Still Subject to Court Approval
ASIC Chair Sarah Court described the action as one of the world's first of its kind and that it also sends a strong message, protecting customers from scams is part of banks' fundamental responsibilities.
Now it will be up to the Federal Court to consider whether they are appropriate and whether to approve the terms of the proposed settlement and penalty.
Source: Reuters
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